Japan's Corporate Tax Revenues Fall By 40%

by Mary Swire, Tax-News.com, Hong Kong

10 November 2008

Statistics released by the Japanese government this week have revealed that corporate tax revenues collected in the six months to the end of September were over 40% lower than in 2007.

In the period spanning April to September the Japanese government received JPY886.72bn (USD9bn) in corporate tax receipts, 40.9% lower than the amount collected in the corresponding period last year.

Much of the decline in revenue from corporate tax has been attributed to declining profits, particularly of large corporations, amid the global economic slowdown. This economic malaise has also led to a much slower accumulation of taxes in general across the country, with consumption tax and personal income tax also suffering a decline for the same period.

Total revenues in the six month period this year amounted to just over JPY13.3 trillion, a year-on-year fall of 5.1%. It is now feared that revenues will fall short of government's targets for the full year, and the shortfall may have to be covered by government reserves, which are supposed to help pay for Prime Minister Taro Aso's stimulus package.

These figures will come as unwelcome news for Aso who is attempting to revive the Japanese economy with a package of economic 'countermeasures' costing JPY2 trillion, including extended and expanded tax breaks for homebuyers and stock investors, and assistance to small businesses.

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